FTSE and sterling rise after initial shock of the PM no-confidence vote
Fiona Cincotta December 12, 2018 8:00 AM
The FTSE is higher but is facing a rocky day ahead after conservative parliamentarians triggered a no-confidence vote in PM Theresa May.
The FTSE is higher but is facing a rocky day ahead after conservative parliamentarians triggered a no-confidence vote in PM Theresa May. The move has been in the pipeline for months, with serious discussions already taking place during the party conference in the early autumn, but after the PM’s Brexit proposal was shot down by most MPs, Conservative and Labour alike, and a last minute attempt to renegotiate the finer points with Brussels yesterday didn’t yield any results, tensions have come to a head. The PM will face a vote between 6 pm and 8 pm today which will determine if she will remain the leader of the party.
Whether Mrs May wins or loses the vote the turmoil is unlikely to stop there because Labour and the Scottish Nationalists are getting ready to challenge the government and ask for a new election. The outcome of that could be more radical – either a no-deal Brexit because the time will run out for a deal – or a potential full U-turn including a new referendum.
Sterling recovers from early dip
The markets seem somewhat shell-shocked by Westminster shenanigans and the FTSE’s first reaction was to move a notch higher on a mixture of hopes that Brexit might end up being delayed or potentially not even happen. Sterling initially fell back to the 20-month low mark but like the FTSE started gaining ground in early trade.
Rolls Royce gains after trading update
Rolls Royce led the FTSE gainers with a nearly 3% rally after it told investors it expected to see profit and free cash flow in the top end of its earlier guidance range this year. The group, which specialises in making engines for large airlines, has managed to overcome the supply problems it was facing earlier this year and has started stockpiling parts and materials in anticipation of an abrupt and uncontrolled Brexit. Looking beyond Britain’s divorce with the EU the company also plans to cut 4,600 jobs over the next two years as part of a larger restructuring plan.
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